Bombay High Court Invalidates Dual GST Investigations on ITC Fraud — B. B. Metal Vs Joint Commissioner of State Tax

Overview of the Dispute

A significant ruling has emerged from the Bombay High Court in B. B. Metal Vs Joint Commissioner of State Tax, where the Court delivered a decisive verdict against what it described as a "gross abuse of process" by State Tax Authorities. The case centered on whether the Maharashtra GST authorities could legitimately initiate fresh investigations and attach an assessee's bank accounts when the Central Tax Authorities had already commenced proceedings on the identical subject matter — specifically, the alleged fraudulent availment of Input Tax Credit (ITC) — covering the same tax periods.

The Court's answer was an unequivocal no. The provisional attachment orders dated 17.09.2025, by which five bank accounts of the assessee were frozen, were quashed and set aside on the ground that they violated Section 6(2)(b) of the CGST/MGST Act and contravened constitutional protections under Articles 265 and 300A of the Constitution of India.

Background Facts: A Chronology of Overlapping Investigations

Understanding why the Bombay High Court intervened requires a careful examination of the sequence of events that led to the disputed provisional attachment orders.

Central Authorities Move First

07.11.2023 — The Directorate General of Goods and Services Tax Intelligence (DGGI), acting as Respondent No. 6, initiated search proceedings against the assessee under allegations of fraudulent ITC availment from one of its suppliers, Stonelan India Pvt. Ltd., for the period 2017-18 to 2023-24.

30.10.2024 — The Superintendent (Anti-evasion), acting as Respondent No. 5, conducted a fresh search at the assessee's premises under Section 67 of the Central Goods and Services Tax (CGST) Act, 2017. This search covered ITC claims from multiple suppliers across the period 2017-18 to 2024-25. Summons were issued simultaneously under Section 70 of the CGST Act.

17.01.2025 — Following the October 2024 search, the jurisdictional Central Tax Authority took two significant steps:

  • It provisionally blocked ITC amounting to Rs. 1,10,21,729/- in the assessee's Electronic Credit Ledger (ECL).
  • It issued a show cause notice against one of the assessee's suppliers, Om Enterprises.

28.03.2025 and 06.08.2025 — DGGI issued further show cause notices to the assessee on the basis of ITC availment, which were subsequently confirmed by the jurisdictional Central Commissionerate, namely the Office of Commissioner of Central Goods and Services Tax and Central Excise, Palghar.

10.02.2026 — An Additional Commissioner of the Central Goods and Service Tax Pune-I Commissionerate issued yet another fresh show cause notice concerning supplies made by vendors whose GST registrations had been either cancelled or suspended, alleging that the assessee had claimed fake ITC on that basis.

State Authorities Enter the Scene — On the Same Subject

25.08.2025 — Notwithstanding the ongoing Central proceedings, the Assistant Commissioner of State Tax (Respondent No. 2) conducted a fresh search under Section 67 of the Maharashtra Goods and Service Tax (MGST) Act, 2017 — on the exact same subject matter: alleged fraudulent ITC availment from suppliers already being investigated by the Central Tax Authorities. An intimation letter was issued on the same date.

02.09.2025 — The assessee filed a reply challenging the jurisdiction of the State Tax Authority and flagging the overlap with Central proceedings already in motion.

17.09.2025 — Despite the assessee's objection, the Joint Commissioner of State Tax (Respondent No. 1) passed orders in Form GST DRC-22, provisionally attaching all five of the assessee's bank accounts:

  1. AXIS BANK, Current Account No. 913020034504830
  2. AXIS BANK, Saving Account No. 923010013372432
  3. INDIAN BANK, Saving Account No. 495067459
  4. STATE BANK OF INDIA, Saving Account No. 31264955290
  5. HDFC BANK, Saving Account No. 50100220025416

These attachment orders formed the core of the writ petition filed before the Bombay High Court under Article 226 of the Constitution of India.

Counsel for the assessee, Mr. Sandeep Sachdeva, advanced the following primary contentions before the Bombay High Court: